Musings on Economics, Finance, and Life

Moral Hazard, Pakistan Edition

The United States can’t pursue al Qaeda alone. We need help from other nations. To encourage nations to provide that help, the U.S. created the Coalition Support Fund to reimburse coalition partners for the costs they incur fighting terrorism.

As Adam Entous reports in the WSJ, the prospect for such “reimbursement” creates an obvious incentive: our partners may exaggerate how much they are really spending:

The U.S. and Pakistan are engaged in a billing dispute of sizable proportions, sparring behind closed doors over billions of dollars Washington pays Islamabad to fight al Qaeda and other militants along the Afghanistan border.

Washington, increasingly dubious of what it sees as Islamabad’s mixed record against militants, has been quietly rejecting more than 40% of the claims submitted by Pakistan as compensation for military gear, food, water, troop housing and other expenses, according to internal Pentagon documents. Those records, reviewed by The Wall Street Journal, detail $3.2 billion in expense claims submitted to the U.S. for operations from January 2009 through June 2010.

According to the documents and interviews with officials, Pakistan has routinely submitted requests that were unsubstantiated, or were deemed by the U.S. to be exaggerated or of little or no use in the war on terror—underscoring what officials and experts see as a deep undercurrent of mistrust between the supposed allies.

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3 Responses

For many years now, I’ve been ranting that we are on our own. It came to a crescendo when we realized that not only were we fighting wars for the benefit of Europe, but when we hit hard times, they laughed and turned their backs. Their policies oppose our own well being and they act like spoiled teenagers that are used to getting everything from mom and dad. We have put up with ridicule, unfair blame, passive aggressive hostility and mockery at the hands of our allies. I’m frustrated that Congress and the White house continues to allow this rape to happen. All the while, China, comes to our aid. And that is at a great financial and ideological cost to us. Let’s stop pretending these alliances exist where the do not. Let’s stop funding these world organizations.